What to watch now that we have a federal budget

By Chris Wiedemann, consultant

Last Friday, as the rain pounded the Washington, D.C. region, my colleague, Tom O’Keefe, and I huddled in a recording studio to chat with Mark Amtower on federal IT trends for his Amtower Off-Center show.

The 45-minute segment was posted here yesterday. Here are highlights of what we think the IT industry needs to know now that there’s a budget in place for the rest of the year.

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Is IT modernization on the horizon?

By Stephanie Meloni, consultant

With lawmakers voting later this week on the $1 trillion bipartisan budget deal, the battle over funding for the remainder of FY17 may be settled fairly peacefully.

If this omnibus passes, it will largely spare civilian agencies from deep cuts in funding. It also includes some interesting features technology companies will want to take note of that will impact IT budgets and priorities.

The omnibus includes no funding for the construction of a border wall but does include $1.5 billion for border security measures, which would include infrastructure and surveillance technologies. This will create opportunities around the internet of things (IoT)—collecting, integrating, securing, storing and analyzing relevant surveillance data. Getting involved early with IoT opportunities will be important as adoption picks up down the line and will give companies with solutions a chance to cite and build upon previous successes.

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What to Know About the Omnibus Spending Bill

Christopher Wiedemann_headshot-65 x 85by Chris Wiedemann, Senior Analyst

The President signed an omnibus spending bill on Friday, January 17 – which means government will be dealing with all-new appropriations for the rest of FY14, instead of last year’s string of continuing resolutions. This is great news, since government now has fiscal certainty for the next 9 months and can finally start some of the projects that have been on hold, waiting for funding. That being said, here are some key points to know about the new appropriations bill:

  • This is a complete omnibus, which means that every government department has new appropriations this year.
  • Appropriations language is generally vague and almost never gets down to the IT level, so we don’t know how this bill will specifically affect IT spending. However, it’s a safe bet that most of our customers’ IT budgets will basically stay flat.
  • One exception to the point above is groups with a specific cyber security mission, which is receiving high priority in this bill. Keep in mind that more money doesn’t always mean more product purchases, especially on the DOD side – but still, we’re seeing growth in cyber spending when other areas are staying flat. Expect cyber-focused elements of DHS and DOJ, as well as USCYBERCOM at DOD, to receive increased funding in the rest of FY14.
  • Although we don’t yet know how agencies will divide their budgets between steady state (SS) and development, modernization, and enhancement (DME)  spending, recent trends suggest that SS levels will be slightly higher this year than last – and since IT top lines are mostly staying flat, government customers will have less DME funding than they did last year. However, because we have new appropriations, there will still likely be more new purchases this year – so get ready for a busy remainder of FY14.

You can also see an agency-by-agency breakdown of top-line funding levels below:

Agency FY14 Funding
Education $70.6B
Veterans Affairs $63.2B
Health and Human Services $62.5B
Homeland Security $39.3B
Justice $27.4B
Energy $26.5B
Agriculture $18.3B
Transportation $17.8B
NASA $17.6B
Treasury $13.02B
Social Security $11.7B
Commerce $8.2B
National Science Foundation $7.2B
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